As start-up ecommerce businesses and online sellers begin to see momentum in sales, they often come to a point where their self-fulfillment is overwhelmed. Rather than adding big cost such as warehouse space, ecommerce companies often outsource fulfillment. After all, the right fulfillment service can greatly improve your company.
While outsourcing your fulfillment to a single fulfillment center will solve your order fulfillment problems, some online sellers need much more than just one fulfillment center.
Distributed inventory, which refers to splitting your inventory across multiple fulfillment centers, has many advantages. Partnering with a 3PL that has multiple warehouses allows you to compete with major retailers. It allows you do so without having to invest in building your own infrastructure.
Is it right for your ecommerce business? Let’s find out.
When Should You Use Multiple Fulfillment Centers
Distributed inventory has unique advantages that can help you gain an edge on your competitors, help you save cost on shipping and can help you deliver your products faster. Let’s take a look at when using multiple fulfillment centers is a good call.
(1) High Volume Orders
When you’re just starting out, one warehouse can be plenty to handle your order fulfillment. As you grow your business, that can change. If you’re at the point where your shipping cost exceeds the cost of added warehouse space, it would be more cost-effective to split your inventory across fulfillment centers.
By leveraging multiple warehouses and splitting your inventory, you’re going to have the opportunity to choose strategically placed fulfillment centers that can allow you to be closer to your customers. This can help improve your delivery times, ultimately improving your customer experience.
(2) Heavy Products
If you’re shipping products that don’t weight a lot (10 ounces or less), you’re not going to be able to save money shipping to customers from a closer location.
Now, if you’re shipping heavy products (more than a pound), you can save a lot when your shipping to closer customers and less shipping zones. This would be an ideal scenario for split inventory.
If you’re shipping a lot of heavy orders, using strategically placed warehouses can save you a lot in shipping expenses.
(3) Geographical Locations
If your customers are spread throughout the United States, multiple fulfillment centers are going to allow you to reach them faster and cheaper. It all depends on where your customers are located. You need to ask yourself, “which customers would benefit from this?”
For example, if the majority of your customers are located on the east coast and your operation is in California, using a fulfillment center on the east coast would certainly improve your shipping times. If you’re doing a lot of order volume, it can help you reduce shipping cost.
(4) Offering 2 Day Shipping
In today’s technological world, a lot of customers expect to get 2 day shipping on the products they buy. Using multiple warehouses is going to allow you to consistently offer 2 day shipping and it can save you on shipping cost.
It’s often difficult to compete against big retailers, using multiple fulfillment centers will help you match your competitor’s delivery times. If you’re not offering that shipping option now, it gives you an opportunity to do just that.
In fact, you should have several shipping options for your customers. This will give you an advantage over the competition as it allows consumers the opportunity to choose what shipping option they like best. When you can ship fast, your customers are going to be happier with the purchase.
(5) Minimize Your Risk In Case Of An Emergency
If you’re only using one fulfillment center, what happens if something would happen?
You want to be protected just in case something would go down and yes, it can happen.
Utilizing multiple fulfillment centers to split your inventory gives you options when emergencies occur.
(6) Getting Into New Markets
If your business is growing, you may be considering gaining market space in new areas. You want those orders to get to customers fast, so getting your product closer to your customers will be very important.
This is also good for branding, especially to those of you that operate on the East or West coast of the U.S.
Knowing when to split inventory over multiple fulfillment centers can help your business grow, improve delivery times, save in shipping cost and help you provide shipping options you didn’t have prior.
The key is knowing when to split inventory and when to stick to your current routine.
Outsourcing your order fulfillment to a single fulfillment center can help your business too. It all depends on the current scenario you’re in.
If you have questions about using multiple 3PL fulfillment centers, give us a call and speak with one of our fulfillment experts. You can reach us during regular business hours at 1-920-967-9201 or you can use our contact form.